Park National Corporation reports financial results for second quarter and first half of 2022

Jul 25th, 2022 20:15 EST

NEWARK, Ohio, July 25, 2022 (GLOBE NEWSWIRE) -- Park National Corporation (Park) (NYSE American: PRK) today reported financial results for the second quarter and first half of 2022. Park's board of directors declared a quarterly cash dividend of $1.04 per common share, payable on September 9, 2022 to common shareholders of record as of August 19, 2022.

“Park bankers’ enthusiasm, energy and competence are valued more than ever by customers and prospects alike. I am grateful for each of them and the talents they share,” said Park Chairman and Chief Executive Officer David Trautman. “We listen to customers first, then find ways to help them on their journeys. If we do this right, we earn the chance to serve more as a result. It’s a wonderful circle of service and growth.”

Park’s net income for the second quarter of 2022 was $34.3 million, a 12.3 percent decrease from $39.1 million for the second quarter of 2021. Second quarter 2022 net income per diluted common share was $2.10, compared to $2.38 in the second quarter of 2021. Park's net income for the first half of 2022 was $73.2 million, a 10.7 percent decrease from $82.0 million for the first half of 2021. Net income per diluted common share was $4.48 for the first half of 2022, compared to $4.98 for the first half of 2021.

Park's community-banking subsidiary, The Park National Bank, reported net income of $34.9 million for the second quarter of 2022, a 14.6 percent decrease compared to $40.9 million for the same period of 2021. Park National Bank reported net income of $76.4 million for the first half of 2022, compared to $86.0 million for the first half of 2021.

Headquartered in Newark, Ohio, Park National Corporation has $9.8 billion in total assets (as of June 30, 2022). Park's banking operations are conducted through its subsidiary The Park National Bank. Other Park subsidiaries are Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance), Guardian Financial Services Company (d.b.a. Guardian Finance Company) and SE Property Holdings, LLC.

Complete financial tables are listed below.

Category: Earnings

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Park cautions that any forward-looking statements contained in this news release or made by management of Park are provided to assist in the understanding of anticipated future financial performance. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.

Risks and uncertainties that could cause actual results to differ materially include, without limitation:

  • the ever-changing effects of the global novel coronavirus (COVID-19) pandemic - - the duration, extent and severity of which are impossible to predict, including the possibility of further resurgence in the spread of COVID-19 or variants thereof - - on economies (local, national and international), supply chains and markets, on the labor market, including the potential for a sustained reduction in labor force participation, and on our customers, counterparties, employees and third-party service providers, as well as the effects of various responses of governmental and nongovernmental authorities to the COVID-19 pandemic, including public health actions directed toward the containment of the COVID-19 pandemic (such as quarantines, shut downs and other restrictions on travel and commercial, social or other activities), the availability, effectiveness and acceptance of vaccines, and the implementation of fiscal stimulus packages;
  • Park's ability to execute our business plan successfully and within the expected timeframe as well as our ability to manage strategic initiatives in light of the impact of the COVID-19 pandemic and the various responses to the COVID-19 pandemic;
  • current and future economic and financial market conditions, either nationally or in the states in which Park and our subsidiaries do business, including the effects of higher unemployment rates, an acceleration in the pace of inflation, U.S. fiscal debt, budget and tax matters, geopolitical matters (including the impact of the Russia-Ukraine conflict and associated sanctions), and any slowdown in global economic growth, in addition to the continuing impact of the COVID-19 pandemic on our customers’ operations and financial condition, any of which may result in adverse impacts on the demand for loan, deposit and other financial services, delinquencies, defaults and counterparties' inability to meet credit and other obligations and the possible impairment of collectability of loans;
  • factors that can impact the performance of our loan portfolio, including changes in real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance, including any loans acquired in acquisition transactions;
  • the effect of monetary and other fiscal policies (including the impact of money supply, market interest rate policies and policies impacting inflation, of the Federal Reserve Board, the U.S. Treasury and other governmental agencies) as well as disruption in the liquidity and functioning of U.S. financial markets, as a result of the COVID-19 pandemic and government policies implemented in response thereto, may adversely impact prepayment penalty income, mortgage banking income, income from fiduciary activities, the value of securities, deposits and other financial instruments, in addition to the loan demand and the performance of our loan portfolio, and the interest rate sensitivity of our consolidated balance sheet as well as reduce interest margins;
  • changes in the federal, state, or local tax laws may adversely affect the fair values of net deferred tax assets and obligations of state and political subdivisions held in Park's investment securities portfolio and otherwise negatively impact our financial performance;
  • the impact of the changes in federal, state and local governmental policy, including the regulatory landscape, capital markets, elevated government debt, potential changes in tax legislation that may increase tax rates, infrastructure spending and social programs;
  • changes in laws or requirements imposed by Park's regulators impacting Park's capital actions, including dividend payments and stock repurchases;
  • changes in consumer spending, borrowing and saving habits, whether due to changes in retail distribution strategies, consumer preferences and behavior, changes in business and economic conditions (including as a result of the COVID-19 pandemic and reactions thereto), legislative and regulatory initiatives (including those undertaken in response to the COVID-19 pandemic), or other factors may be different than anticipated;
  • changes in customers', suppliers', and other counterparties' performance and creditworthiness, and Park's expectations regarding future credit losses and our allowance for credit losses, may be different than anticipated due to the continuing impact of and the various responses to the COVID-19 pandemic and inflationary pressures;
  • Park may have more credit risk and higher credit losses to the extent there are loan concentrations by location or industry of borrowers or collateral;
  • the volatility from quarter to quarter of mortgage banking income, whether due to interest rates, demand, the fair value of mortgage loans, or other factors;
  • the adequacy of our internal controls and risk management program in the event of changes in the market, economic, operational (including those which may result from our associates working remotely), asset/liability repricing, legal, compliance, strategic, cybersecurity, liquidity, credit and interest rate risks associated with Park's business;
  • competitive pressures among financial services organizations could increase significantly, including product and pricing pressures (which could in turn impact our credit spreads), changes to third-party relationships and revenues, changes in the manner of providing services, customer acquisition and retention pressures, and Park's ability to attract, develop and retain qualified banking professionals;
  • uncertainty regarding the nature, timing, cost and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of Park and our subsidiaries, including major reform of the regulatory oversight structure of the financial services industry and changes in laws and regulations concerning taxes, FDIC insurance premium levels, pensions, bankruptcy, consumer protection, rent regulation and housing, financial accounting and reporting, environmental protection, insurance, bank products and services, bank and bank holding company capital and liquidity standards, fiduciary standards, securities and other aspects of the financial services industry, specifically the reforms provided for in the Coronavirus Aid, Relief and Economic Security (CARES) Act and the follow-up legislation in the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of 2021, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and the Basel III regulatory capital reforms, as well as regulations already adopted and which may be adopted in the future by the relevant regulatory agencies, including the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board, to implement the provisions of the CARES Act and the follow-up legislation in the Consolidated Appropriations Act, 2021, the provisions of the American Rescue Plan Act of 2021, the provisions of the Dodd-Frank Act, and the Basel III regulatory capital reforms;
  • the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board (the "FASB"), the SEC, the Public Company Accounting Oversight Board and other regulatory agencies, may adversely affect Park's reported financial condition or results of operations;
  • Park's assumptions and estimates used in applying critical accounting policies and modeling, including under the CECL model, which may prove unreliable, inaccurate or not predictive of actual results;
  • the impact of Park's ability to anticipate and respond to technological changes on Park's ability to respond to customer needs and meet competitive demands;
  • operational issues stemming from and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems on which Park and our subsidiaries are highly dependent;
  • the ability to secure confidential information and deliver products and services through the use of computer systems and telecommunications networks, including those of Park's third-party vendors and other service providers, which may prove inadequate, and could adversely affect customer confidence in Park and/or result in Park incurring a financial loss;
  • a failure in or breach of Park's operational or security systems or infrastructure, or those of our third-party vendors and other service providers, resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems, including as a result of cyber attacks;
  • the impact on Park's business and operating results of any costs associated with obtaining rights in intellectual property claimed by others and of adequacy of Park's intellectual property protection in general;
  • the existence or exacerbation of general geopolitical instability and uncertainty as well as the effect of trade policies (including the impact of potential or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars and other changes in trade regulations, closing of border crossings and changes in the relationship of the U.S. and its global trading partners);
  • the impact on financial markets and the economy of any changes in the credit ratings of the U.S. Treasury obligations and other U.S. government-backed debt, as well as issues surrounding the levels of U.S., European and Asian government debt and concerns regarding the growth rates and financial stability of certain sovereign governments, supranationals and financial institutions in Europe and Asia and the risk they may face difficulties servicing their sovereign debt;
  • the effect of a fall in stock market prices on Park's asset and wealth management businesses;
  • our litigation and regulatory compliance exposure, including the costs and effects of any adverse developments in legal proceedings or other claims and the costs and effects of unfavorable resolution of regulatory and other governmental examinations or other inquiries;
  • continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends;
  • the impact on Park's business, personnel, facilities or systems of losses related to acts of fraud, scams and schemes of third parties;
  • the impact of widespread natural and other disasters, pandemics (including the COVID-19 pandemic), dislocations, regional or national protests and civil unrest (including any resulting branch closures or damages), military or terrorist activities or international hostilities (especially in light of the Russia-Ukraine conflict) on the economy and financial markets generally and on us or our counterparties specifically;
  • any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially affect our business, including our customers' willingness to conduct banking transactions and their ability to pay on existing obligations;
  • the effect of healthcare laws in the U.S. and potential changes for such laws, especially in light of the COVID-19 pandemic, which may increase our healthcare and other costs and negatively impact our operations and financial results;
  • risk and uncertainties associated with Park's entry into new geographic markets with our most recent acquisitions, including expected revenue synergies and cost savings from recent acquisitions not being fully realized or realized within the expected time frame;
  • the replacement of the London Inter-Bank Offered Rate (LIBOR) with other reference rates which may result in increased expenses and litigation, and adversely impact the effectiveness of hedging strategies;
  • and other risk factors relating to the banking industry as detailed from time to time in Park's reports filed with the SEC including those described in "Item 1A. Risk Factors" of Part I of Park's Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Park does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement was made, or reflect the occurrence of unanticipated events, except to the extent required by law.

 
PARK NATIONAL CORPORATION
Financial Highlights
As of or for the three months ended June 30, 2022, March 31, 2022, and June 30, 2021
       
  2022  2022  2021  Percent change vs.
(in thousands, except share and per share data and ratios)2nd QTR1st QTR2nd QTR 1Q '222Q '21
INCOME STATEMENT:      
Net interest income$83,939 $77,686 $83,851  8.0%0.1%
Provision for (recovery of) credit losses 2,991  (4,605) (4,040) N.M. N.M. 
Other income 31,193  31,656  31,238  (1.5)%(0.1)%
Other expense 70,048  67,373  71,400  4.0%(1.9)%
Income before income taxes$42,093 $46,574 $47,729  (9.6)%(11.8)%
Income taxes 7,769  7,699  8,597  0.9%(9.6)%
Net income$34,324 $38,875 $39,132  (11.7)%(12.3)%
       
MARKET DATA:      
Earnings per common share - basic (a)$2.11 $2.40 $2.39  (12.1)%(11.7)%
Earnings per common share - diluted (a) 2.10  2.38  2.38  (11.8)%(11.8)%
Quarterly cash dividends declared per common share 1.04  1.04  1.03  %1.0%
Book value per common share at period end 64.62  66.24  65.44  (2.4)%(1.3)%
Market price per common share at period end 121.25  131.38  117.42  (7.7)%3.3%
Market capitalization at period end 1,970,228  2,134,834  1,918,733  (7.7)%2.7%
        
Weighted average common shares - basic (b) 16,249,307  16,219,889  16,340,690  0.2%(0.6)%
Weighted average common shares - diluted (b) 16,361,246  16,331,031  16,472,800  0.2%(0.7)%
Common shares outstanding at period end 16,249,306  16,249,308  16,340,772  %(0.6)%
        
PERFORMANCE RATIOS: (annualized)       
Return on average assets (a)(b) 1.42% 1.60% 1.59% (11.3)%(10.7)% 
Return on average shareholders' equity (a)(b) 12.86% 14.26% 14.81% (9.8)%(13.2)% 
Yield on loans 4.57% 4.31% 4.60% 6.0%(0.7)% 
Yield on investment securities 2.35% 2.11% 2.31% 11.4%1.7%
Yield on money market instruments 0.77% 0.17% 0.10% 352.9%670.0%
Yield on interest earning assets 4.04% 3.71% 3.93% 8.9%2.8%
Cost of interest bearing deposits 0.16% 0.08% 0.13% 100.0%23.1%
Cost of borrowings 2.50% 2.35% 1.91% 6.4%30.9%
Cost of paying interest bearing liabilities 0.33% 0.25% 0.29% 32.0%13.8%
Net interest margin (g) 3.84% 3.55% 3.74% 8.2%2.7%
Efficiency ratio (g) 60.38% 61.16% 61.65% (1.3)% (2.1)% 
         
OTHER DATA (NON-GAAP) AND BALANCE SHEET:        
Tangible book value per share (d)$54.39 $55.98 $55.17  (2.8)% (1.4)% 
Average interest earning assets 8,857,089  8,959,109  9,062,368  (1.1)% (2.3)% 
Pre-tax, pre-provision net income (m) 45,084  41,969  43,689  7.4%3.2%
       
Note: Explanations for footnotes (a) - (m) are included at the end of the financial tables in the "Financial Reconciliations" section.
       
       
PARK NATIONAL CORPORATION
Financial Highlights (continued)
As of or for the three months ended June 30, 2022, March 31, 2022, and June 30, 2021
       
     Percent change vs.
(in thousands, except ratios)June 30, 2022March 31, 2022June 30, 2021 1Q '222Q '21
BALANCE SHEET:      
Investment securities$1,920,724 $1,832,274 $1,461,916  4.8%31.4%
Commercial loans held for sale 6,321      N.N.
Loans 6,958,685  6,821,606  7,035,646  2.0%(1.1)%
Allowance for credit losses 81,448  78,861  83,577  3.3%(2.5)%
Goodwill and other intangible assets 166,252  166,655  167,897  (0.2)%(1.0)%
Other real estate owned (OREO) 1,354  760  813  78.2%66.5%
Total assets 9,826,670  9,576,352  9,947,994  2.6%(1.2)%
Total deposits 8,297,654  7,996,318  8,214,624  3.8%1.0%
Borrowings 360,234  394,249  501,350  (8.6)%(28.1)%
Total shareholders' equity 1,050,013  1,076,366  1,069,392  (2.4)%(1.8)%
Tangible equity (d) 883,761  909,711  901,495  (2.9)%(2.0)%
Total nonperforming loans 64,627  86,891  114,695  (25.6)%(43.7)%
Total nonperforming loans including commercial loans held for sale 70,246  86,891  114,695  (19.2)%(38.8)%
Total nonperforming assets 71,600  87,651  118,672  (18.3)%(39.7)%
         
ASSET QUALITY RATIOS:        
Loans as a % of period end total assets 70.81% 71.23% 70.72% (0.6)%0.1%
Total nonperforming loans as a % of period end loans 0.93% 1.27% 1.63% (26.8)%(42.9)%
Total nonperforming assets as a % of period end loans + OREO + other nonperforming assets 1.03% 1.28% 1.69% (19.5)%(39.1)%
Allowance for credit losses as a % of period end loans 1.17% 1.16% 1.19% 0.9%(1.7)%
Net loan charge-offs (recoveries)$404 $(269)$(731) N.M N.M 
Annualized net loan charge-offs (recoveries) as a % of average loans (b) 0.02% (0.02)% (0.04)% N.M N.M 
         
CAPITAL & LIQUIDITY:        
Total shareholders' equity / Period end total assets 10.69% 11.24% 10.75% (4.9)% (0.6)% 
Tangible equity (d) / Tangible assets (f) 9.15% 9.67% 9.22% (5.4)% (0.8)% 
Average shareholders' equity / Average assets (b) 11.06% 11.25% 10.74% (1.7)% 3.0%
Average shareholders' equity / Average loans (b) 15.65% 16.19% 14.94% (3.3)% 4.8%
Average loans / Average deposits (b) 84.27% 83.32% 86.49% 1.1%(2.6)% 
        
Note: Explanations for footnotes (a) - (m) are included at the end of the financial tables in the "Financial Reconciliations" section.

PARK NATIONAL CORPORATION
Financial Highlights
Six months ended June 30, 2022 and June 30, 2021   
     
  2022  2021   
(in thousands, except share and per share data)Six monthsendedJune 30Six monthsendedJune 30 Percentchange vs'21
INCOME STATEMENT:    
Net interest income$161,625 $164,585  (1.8)%
Recovery of credit losses (1,614) (8,895) N.M
Other income 62,849  65,327  (3.8)%
Other expense 137,421  139,265  (1.3)%
Income before income taxes$88,667 $99,542  (10.9)%
Income taxes 15,468  17,579  (12.0)%
Net income$73,199 $81,963  (10.7)%
     
MARKET DATA:    
Earnings per common share - basic (a)$4.51 $5.02  (10.2)%
Earnings per common share - diluted (a) 4.48  4.98  (10.0)%
Quarterly cash dividends declared per common share 2.08  2.06  1.0%
Special cash dividends declared per common share   0.20  N.M.
     
Weighted average common shares - basic (b) 16,234,598  16,327,838  (0.6)%
Weighted average common shares - diluted (b) 16,346,141  16,455,673  (0.7)%
     
PERFORMANCE RATIOS: (annualized)    
Return on average assets (a)(b) 1.51% 1.70% (11.2)%
Return on average shareholders' equity (a)(b) 13.57% 15.71% (13.6)%
Yield on loans 4.44% 4.54% (2.2)%
Yield on investment securities 2.24% 2.41% (7.1)%
Yield on money market instruments 0.34% 0.10% 240.0%
Yield on interest earning assets 3.88% 3.95% (1.8)%
Cost of interest bearing deposits 0.12% 0.14% (14.3)%
Cost of borrowings 2.42% 1.89% 28.0%
Cost of paying interest bearing liabilities 0.29% 0.30% (3.3)%
Net interest margin (g) 3.70% 3.75% (1.3)%
Efficiency ratio (g) 60.76% 60.20% 0.9%
     
ASSET QUALITY RATIOS    
Net loan charge-offs (recoveries)$135 $(707) N.M.
Annualized net loan charge-offs (recoveries) as a % of average loans (b) %(0.02)% N.M.
     
CAPITAL & LIQUIDITY    
Average shareholders' equity / Average assets (b) 11.16% 10.80% 3.3%
Average shareholders' equity / Average loans (b) 15.92% 14.79% 7.6%
Average loans / Average deposits (b) 83.80% 88.26% (5.1)%
     
OTHER DATA (NON-GAAP) AND BALANCE SHEET:    
Average interest earning assets$8,907,817 $8,925,097  (0.2)%
Pre-tax, pre-provision net income (m) 87,053  90,647  (4.0)%
     
Note: Explanations for footnotes (a) - (m) are included at the end of the financial tables in the "Financial Reconciliations" section.
     

PARK NATIONAL CORPORATION
Consolidated Statements of Income
         
  Three Months Ended Six Months Ended
  June 30, June 30,
(in thousands, except share and per share data) 2022  2021   2022   2021 
         
Interest income:        
Interest and fees on loans $77,787 $81,176  $150,203  $159,913 
Interest on debt securities:        
Taxable  7,624  4,600   13,754   8,856 
Tax-exempt  2,676  2,032   5,123   4,069 
Other interest income  260  186   413   329 
Total interest income  88,347  87,994   169,493   173,167 
         
Interest expense:        
Interest on deposits:        
Demand and savings deposits  1,333  401   1,684   787 
Time deposits  708  1,285   1,428   2,869 
Interest on borrowings  2,367  2,457   4,756   4,926 
Total interest expense  4,408  4,143   7,868   8,582 
         
Net interest income  83,939  83,851   161,625   164,585 
         
Provision for (recovery of) credit losses  2,991  (4,040)  (1,614)  (8,895)
         
Net interest income after provision for (recovery of) credit losses  80,948  87,891   163,239   173,480 
         
Other income  31,193  31,238   62,849   65,327 
         
Other expense  70,048  71,400   137,421   139,265 
         
Income before income taxes  42,093  47,729   88,667   99,542 
         
Income taxes  7,769  8,597   15,468   17,579 
         
Net income $34,324 $39,132  $73,199  $81,963 
         
Per common share:        
Net income - basic $2.11 $2.39  $4.51  $5.02 
Net income - diluted $2.10 $2.38  $4.48  $4.98 
         
Weighted average shares - basic  16,249,307  16,340,690   16,234,598   16,327,838 
Weighted average shares - diluted  16,361,246  16,472,800   16,346,141   16,455,673 
         
Cash dividends declared:        
   Quarterly dividend $1.04 $1.03  $2.08  $2.06 
   Special dividend $ $  $  $0.20 

PARK NATIONAL CORPORATION
Consolidated Balance Sheets
   
(in thousands, except share data)June 30, 2022December 31, 2021
   
Assets  
   
Cash and due from banks$171,114 $144,507 
Money market instruments 75,327  74,673 
Investment securities 1,920,724  1,815,408 
Commercial loans held for sale 6,321   
Loans 6,958,685  6,871,122 
Allowance for credit losses (81,448) (83,197)
Loans, net 6,877,237  6,787,925 
Bank premises and equipment, net 85,531  89,008 
Goodwill and other intangible assets 166,252  167,057 
Other real estate owned 1,354  775 
Other assets 522,810  480,901 
Total assets$9,826,670 $9,560,254 
   
Liabilities and Shareholders' Equity  
   
Deposits:  
Noninterest bearing$3,057,977 $3,066,419 
Interest bearing 5,239,677  4,838,109 
Total deposits 8,297,654  7,904,528 
Borrowings 360,234  426,996 
Other liabilities 118,769  117,971 
Total liabilities$8,776,657 $8,449,495 
   
   
Shareholders' Equity:  
Preferred shares (200,000 shares authorized; no shares outstanding at June 30, 2022 and December 31, 2021)$ $ 
Common shares (No par value; 20,000,000 shares authorized; 17,623,104 shares issued at June 30, 2022 and 17,623,118 shares issued at December 31, 2021) 460,645  461,800 
Accumulated other comprehensive (loss) income, net of taxes (85,404) 15,155 
Retained earnings 814,241  776,294 
Treasury shares (1,373,798 shares at June 30, 2022 and 1,403,555 shares at December 31, 2021) (139,469) (142,490)
Total shareholders' equity$1,050,013 $1,110,759 
Total liabilities and shareholders' equity$9,826,670 $9,560,254 

PARK NATIONAL CORPORATION
Consolidated Average Balance Sheets
       
  Three Months Ended Six Months Ended
  June 30, June 30,
(in thousands)  2022  2021   2022  2021 
       
Assets      
       
Cash and due from banks $159,095 $131,397  $163,884 $139,784 
Money market instruments  136,232  720,238   247,549  637,531 
Investment securities  1,855,313  1,307,037   1,828,568  1,234,178 
Loans  6,841,376  7,094,099   6,835,389  7,116,353 
Allowance for credit losses  (78,907) (87,083)  (81,158) (88,511)
Loans, net  6,762,469  7,007,016   6,754,231  7,027,842 
Bank premises and equipment, net  87,029  90,269   87,879  90,006 
Goodwill and other intangible assets  166,516  168,211   166,716  168,449 
Other real estate owned  773  822   766  1,016 
Other assets  511,593  447,088   502,203  444,221 
Total assets $9,679,020 $9,872,078  $9,751,796 $9,743,027 
       
       
Liabilities and Shareholders' Equity      
       
Deposits:      
Noninterest bearing $3,097,920 $2,940,602  $3,062,154 $2,866,909 
Interest bearing  5,020,698  5,261,608   5,095,085  5,195,848 
Total deposits  8,118,618  8,202,210   8,157,239  8,062,757 
Borrowings  380,361  514,855   395,806  526,715 
Other liabilities  109,548  95,064   110,832  101,332 
Total liabilities $8,608,527 $8,812,129  $8,663,877 $8,690,804 
       
Shareholders' Equity:      
Preferred shares $ $  $ $ 
Common shares  459,418  457,949   460,601  459,327 
Accumulated other comprehensive loss, net of taxes  (58,869) (4,876)  (30,452) (1,865)
Retained earnings  809,413  734,993   798,724  724,183 
Treasury shares  (139,469) (128,117)  (140,954) (129,422)
Total shareholders' equity $1,070,493 $1,059,949  $1,087,919 $1,052,223 
Total liabilities and shareholders' equity $9,679,020 $9,872,078  $9,751,796 $9,743,027 
       

PARK NATIONAL CORPORATION
Consolidated Statements of Income - Linked Quarters
      
  2022 2022  2021  2021 2021 
(in thousands, except per share data)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
      
Interest income:     
Interest and fees on loans$77,787$72,416 $79,168 $78,127$81,176 
Interest on debt securities:     
Taxable 7,624 6,130  5,698  4,904 4,600 
Tax-exempt 2,676 2,447  2,209  2,029 2,032 
Other interest income 260 153  191  360 186 
Total interest income 88,347 81,146  87,266  85,420 87,994 
      
Interest expense:     
Interest on deposits:     
Demand and savings deposits 1,333 351  373  435 401 
Time deposits 708 720  831  1,011 1,285 
Interest on borrowings 2,367 2,389  2,356  2,372 2,457 
Total interest expense 4,408 3,460  3,560  3,818 4,143 
      
Net interest income 83,939 77,686  83,706  81,602 83,851 
      
Provision for (recovery of) credit losses 2,991 (4,605) (4,993) 1,972 (4,040)
      
Net interest income after provision for (recovery of) credit losses 80,948 82,291  88,699  79,630 87,891 
      
Other income 31,193 31,656  32,206  32,411 31,238 
      
Other expense 70,048 67,373  75,764  68,489 71,400 
      
Income before income taxes 42,093 46,574  45,141  43,552 47,729 
      
Income taxes 7,769 7,699  8,593  8,118 8,597 
      
Net income$34,324$38,875 $36,548 $35,434$39,132 
      
Per common share:     
Net income - basic$2.11$2.40 $2.25 $2.17$2.39 
Net income - diluted$2.10$2.38 $2.23 $2.16$2.38 

PARK NATIONAL CORPORATION
Detail of other income and other expense - Linked Quarters
      
  2022 2022 2021 2021 2021
(in thousands)2nd QTR1st QTR4th QTR3rd QTR2nd QTR
      
Other income:     
Income from fiduciary activities$8,859$8,797$8,887$8,820$8,569
Service charges on deposit accounts 2,563 2,074 2,357 2,389 2,032
Other service income 4,940 4,819 6,368 6,668 7,159
Debit card fee income 6,731 6,126 6,568 6,453 6,758
Bank owned life insurance income 2,374 1,175 1,121 1,462 1,149
ATM fees 583 532 572 622 655
Gain on equity securities, net 709 2,353 2,125 609 467
Other components of net periodic benefit income 3,027 3,027 2,038 2,038 2,038
Miscellaneous 1,407 2,753 2,170 3,350 2,411
Total other income$31,193$31,656$32,206$32,411$31,238
      
Other expense:     
Salaries$31,052$30,521$35,953$29,433$30,303
Employee benefits 10,199 10,499 10,706 10,640 10,056
Occupancy expense 3,040 3,214 3,161 3,211 3,027
Furniture and equipment expense 2,934 2,937 2,724 2,797 2,756
Data processing fees 8,416 7,504 7,860 7,817 7,150
Professional fees and services 6,775 5,858 7,840 6,973 6,973
Marketing 1,019 1,317 1,718 1,574 1,290
Insurance 1,245 1,405 1,547 1,403 1,276
Communication 935 890 851 796 770
State tax expense 1,167 1,192 931 1,113 1,103
Amortization of intangible assets 403 402 420 420 479
Foundation contributions     4,000
Miscellaneous 2,863 1,634 2,053 2,312 2,217
Total other expense$70,048$67,373$75,764$68,489$71,400

PARK NATIONAL CORPORATION
Asset Quality Information
       
   Year ended December 31,
(in thousands, except ratios)June 30, 2022March 31, 2022 2021  2020  2019  2018 
       
Allowance for credit losses:      
Allowance for credit losses, beginning of period$78,861 $83,197 $85,675 $56,679 $51,512 $49,988 
Cumulative change in accounting principle; adoption of ASU 2016-13     6,090       
Charge-offs 2,402  1,347  5,093  10,304  11,177  13,552 
Recoveries 1,998  1,616  8,441  27,246  10,173  7,131 
Net charge-offs (recoveries) 404  (269) (3,348) (16,942) 1,004  6,421 
Provision for (recovery of) credit losses 2,991  (4,605) (11,916) 12,054  6,171  7,945 
Allowance for credit losses, end of period$81,448 $78,861 $83,197 $85,675 $56,679 $51,512 
       
       
General reserve trends:      
Allowance for credit losses, end of period$81,448 $78,861 $83,197 $85,675 $56,679 $51,512 
Allowance on purchased credit deteriorated ("PCD") loans (purchased credit impaired ("PCI") loans for years 2020 and prior)       167  268   
Allowance on purchased loans excluded from the general reserve       678     
Specific reserves on individually evaluated loans 1,874  1,513  1,616  5,434  5,230  2,273 
General reserves on collectively evaluated loans$79,574 $77,348 $81,581 $79,396 $51,181 $49,239 
       
Total loans$6,958,685 $6,821,606 $6,871,122 $7,177,785 $6,501,404 $5,692,132 
PCD loans (PCI loans for years 2020 and prior) 5,934  6,987  7,149  11,153  14,331  3,943 
Purchased loans excluded from collectively evaluated loans       360,056  548,436  225,029 
Individually evaluated loans 42,523  63,209  74,502  108,407  77,459  48,135 
Collectively evaluated loans$6,910,228 $6,751,410 $6,789,471 $6,698,169 $5,861,178 $5,415,025 
       
Asset Quality Ratios:      
Annualized net charge-offs (recoveries) as a % of average loans 0.02%(0.02) %(0.05)%(0.24)% 0.02% 0.12%
Allowance for credit losses as a % of period end loans 1.17% 1.16% 1.21% 1.19% 0.87% 0.90%
Allowance for credit losses as a % of period end loans (excluding PPP loans) (k) 1.17% 1.16% 1.22% 1.25%N.A.N.A.
General reserve as a % of collectively evaluated loans 1.15% 1.15% 1.20% 1.19% 0.87% 0.91%
General reserves as a % of collectively evaluated loans (excluding PPP loans) (k) 1.15% 1.15% 1.21% 1.24%N.A.N.A.
       
Nonperforming assets:      
Nonaccrual loans$44,374 $54,018 $72,722 $117,368 $90,080 $67,954 
Accruing troubled debt restructurings 19,746  32,428  28,323  20,788  21,215  15,173 
Loans past due 90 days or more 507  445  1,607  1,458  2,658  2,243 
Total nonperforming loans$64,627 $86,891 $102,652 $139,614 $113,953 $85,370 
Commercial loans held for sale, previously nonperforming 5,619           
Total nonperforming loans, including commercial loans held for sale$70,246 $86,891 $102,652 $139,614 $113,953 $85,370 
Other real estate owned - Park National Bank   166  181  837  3,100  2,788 
Other real estate owned - SEPH 1,354  594  594  594  929  1,515 
Other nonperforming assets - Park National Bank     2,750  3,164  3,599  3,464 
Total nonperforming assets$71,600 $87,651 $106,177 $144,209 $121,581 $93,137 
Percentage of nonaccrual loans to period end loans 0.64% 0.79% 1.06% 1.64% 1.39% 1.19%
Percentage of nonperforming loans to period end loans 0.93% 1.27% 1.49% 1.95% 1.75% 1.50%
Percentage of nonperforming assets to period end loans 1.03% 1.28% 1.55% 2.01% 1.87% 1.64%
Percentage of nonperforming assets to period end total assets 0.73% 0.92% 1.11% 1.55% 1.42% 1.19%
       
Note: Explanations for footnotes (a) - (m) are included at the end of the financial tables in the "Financial Reconciliations" section.

PARK NATIONAL CORPORATION
Asset Quality Information (continued)
       
   Year ended December 31,
(in thousands, except ratios)June 30,2022March 31,2022 2021 2020 2019 2018
       
       
New nonaccrual loan information:      
Nonaccrual loans, beginning of period$54,018$72,722$117,368$90,080$67,954$72,056
New nonaccrual loans 7,881 6,000 38,478 103,386 81,009 76,611
Resolved nonaccrual loans 11,906 24,704 83,124 76,098 58,883 80,713
Loans transferred to held for sale 5,619     
Nonaccrual loans, end of period$44,374$54,018$72,722$117,368$90,080$67,954
       
Individually evaluated commercial loan portfolio information (period end):(l)      
Unpaid principal balance$42,905$63,833$75,126$109,062$78,178$59,381
Prior charge-offs 382 624 624 655 719 11,246
Remaining principal balance 42,523 63,209 74,502 108,407 77,459 48,135
Specific reserves 1,874 1,513 1,616 5,434 5,230 2,273
Book value, after specific reserves$40,649$61,696$72,886$102,973$72,229$45,862
       
Note: Explanations for footnotes (a) - (m) are included at the end of the financial tables in the "Financial Reconciliations" section.

PARK NATIONAL CORPORATION   
Financial Reconciliations      
NON-GAAP RECONCILIATIONS      
 THREE MONTHS ENDED SIX MONTHS ENDED
(in thousands, except share and per share data)June 30, 2022March 31, 2022June 30, 2021 June 30, 2022June 30, 2021
Net interest income$83,939 $77,686 $83,851  $161,625 $164,585 
less purchase accounting accretion related to NewDominion and Carolina Alliance acquisitions 547  480  806   1,027  1,937 
less interest income on former Vision Bank relationships 2,305  42  2,838   2,347  2,943 
Net interest income - adjusted$81,087 $77,164 $80,207  $158,251 $159,705 
       
Provision for (recovery of) credit losses$2,991 $(4,605)$(4,040) $(1,614)$(8,895)
less recoveries on former Vision Bank relationships (506) (1) (152)  (507) (409)
Provision for (recovery of) credit losses - adjusted$3,497 $(4,604)$(3,888) $(1,107)$(8,486)
       
Other income$31,193 $31,656 $31,238  $62,849 $65,327 
less other service income related to former Vision Bank relationships 500    3   500  61 
Other income - adjusted$30,693 $31,656 $31,235  $62,349 $65,266 
       
Other expense$70,048 $67,373 $71,400  $137,421 $139,265 
less merger-related expenses related to NewDominion and Carolina Alliance acquisitions     4     16 
less core deposit intangible amortization related to NewDominion and Carolina Alliance acquisitions 403  402  479   805  958 
less direct expenses related to collection of payments on former Vision Bank loan relationships 366    300   366  407 
less rebranding initiative related expenses 336  344  342   680  1,297 
less Foundation contribution     4,000     4,000 
less severance and restructuring charges 497  42  46   539  154 
less COVID-19 related expenses (j) 141  606  670   747  1,535 
Other expense - adjusted$68,305 $65,979 $65,559  $134,284 $130,898 
       
Tax effect of adjustments to net income identified above (i)$(444)$183 $429  $(261)$634 
       
Net income - reported$34,324 $38,875 $39,132  $73,199 $81,963 
Net income - adjusted (h)$32,653 $39,563 $40,745  $72,216 $84,346 
       
Diluted earnings per share$2.10 $2.38 $2.38  $4.48 $4.98 
Diluted earnings per share, adjusted (h)$2.00 $2.42 $2.47  $4.42 $5.13 
       
Annualized return on average assets (a)(b) 1.42% 1.60% 1.59%  1.51% 1.70%
Annualized return on average assets, adjusted (a)(b)(h) 1.35% 1.63% 1.66%  1.49% 1.75%
       
Annualized return on average tangible assets (a)(b)(e) 1.45% 1.63% 1.62%  1.54% 1.73%
Annualized return on average tangible assets, adjusted (a)(b)(e)(h) 1.38% 1.66% 1.68%  1.52% 1.78%
       
Annualized return on average shareholders' equity (a)(b) 12.86% 14.26% 14.81%  13.57% 15.71%
Annualized return on average shareholders' equity, adjusted (a)(b)(h) 12.23% 14.51% 15.42%  13.39% 16.16%
       
Annualized return on average tangible equity (a)(b)(c) 15.23% 16.80% 17.60%  16.02% 18.70%
Annualized return on average tangible equity, adjusted (a)(b)(c)(h) 14.49% 17.09% 18.33%  15.81% 19.25%
       
Efficiency ratio (g) 60.38% 61.16% 61.65%  60.76% 60.20%
Efficiency ratio, adjusted (g)(h) 60.63% 60.18% 58.45%  60.41% 57.82%
       
Annualized net interest margin (g) 3.84% 3.55% 3.74%  3.70% 3.75%
Annualized net interest margin, adjusted (g)(h) 3.71% 3.53% 3.58%  3.62% 3.64%
       
Note: Explanations for footnotes (a) - (m) are included at the end of the financial tables in the "Financial Reconciliations" section.

PARK NATIONAL CORPORATION   
Financial Reconciliations (continued)      
       
(a) Reported measure uses net income  
(b) Averages are for the three months ended June 30, 2022, March 31, 2022, and June 30, 2021 and the six months ended June 30, 2022 and June 30, 2021, as appropriate
(c) Net income for each period divided by average tangible equity during the period. Average tangible equity equals average shareholders' equity during the applicable period less average goodwill and other intangible assets during the applicable period.
       
RECONCILIATION OF AVERAGE SHAREHOLDERS' EQUITY TO AVERAGE TANGIBLE EQUITY:   
 THREE MONTHS ENDED SIX MONTHS ENDED
 June 30, 2022March 31, 2022June 30, 2021 June 30, 2022June 30, 2021
AVERAGE SHAREHOLDERS' EQUITY$1,070,493$1,105,540 $1,059,949  $1,087,919 $1,052,223 
Less: Average goodwill and other intangible assets 166,516 166,918  168,211   166,716  168,449 
AVERAGE TANGIBLE EQUITY$903,977$938,622 $891,738  $921,203 $883,774 
       
(d) Tangible equity divided by common shares outstanding at period end. Tangible equity equals total shareholders' equity less goodwill and other intangible assets, in each case at the end of the period.
       
RECONCILIATION OF TOTAL SHAREHOLDERS' EQUITY TO TANGIBLE EQUITY:  
 June 30, 2022March 31, 2022June 30, 2021   
TOTAL SHAREHOLDERS' EQUITY$1,050,013$1,076,366 $1,069,392    
Less: Goodwill and other intangible assets 166,252 166,655  167,897    
TANGIBLE EQUITY$883,761$909,711 $901,495    
       
(e) Net income for each period divided by average tangible assets during the period. Average tangible assets equal average assets less average goodwill and other intangible assets, in each case during the applicable period.
       
RECONCILIATION OF AVERAGE ASSETS TO AVERAGE TANGIBLE ASSETS   
 THREE MONTHS ENDED SIX MONTHS ENDED
 June 30, 2022March 31, 2022June 30, 2021 June 30, 2022June 30, 2021
AVERAGE ASSETS$9,679,020$9,825,382 $9,872,078  $9,751,796 $9,743,027 
Less: Average goodwill and other intangible assets 166,516 166,918  168,211   166,716  168,449 
AVERAGE TANGIBLE ASSETS$9,512,504$9,658,464 $9,703,867  $9,585,080 $9,574,578 
       
(f) Tangible equity divided by tangible assets. Tangible assets equal total assets less goodwill and other intangible assets, in each case at the end of the period.
       
RECONCILIATION OF TOTAL ASSETS TO TANGIBLE ASSETS:  
 June 30, 2022March 31, 2022June 30, 2021   
TOTAL ASSETS$9,826,670$9,576,352 $9,947,994    
Less: Goodwill and other intangible assets 166,252 166,655  167,897    
TANGIBLE ASSETS$9,660,418$9,409,697 $9,780,097    
       
 
       
(g) Efficiency ratio is calculated by dividing total other expense by the sum of fully taxable equivalent net interest income and other income. Fully taxable equivalent net interest income reconciliation is shown assuming a 21% corporate federal income tax rate. Additionally, net interest margin is calculated on a fully taxable equivalent basis by dividing fully taxable equivalent net interest income by average interest earning assets, in each case during the applicable period.
       
RECONCILIATION OF FULLY TAXABLE EQUIVALENT NET INTEREST INCOME TO NET INTEREST INCOME  
 THREE MONTHS ENDED SIX MONTHS ENDED
 June 30, 2022March 31, 2022June 30, 2021 June 30, 2022June 30, 2021
Interest income$88,347$81,146 $87,994  $169,493 $173,167 
Fully taxable equivalent adjustment 872 819  718   1,691  1,432 
Fully taxable equivalent interest income$89,219$81,965 $88,712  $171,184 $174,599 
Interest expense 4,408 3,460  4,143   7,868  8,582 
Fully taxable equivalent net interest income$84,811$78,505 $84,569  $163,316 $166,017 
       
(h) Adjustments to net income for each period presented are detailed in the non-GAAP reconciliations of net interest income, provision for (recovery of) credit losses, other income and other expense.
(i) The tax effect of adjustments to net income was calculated assuming a 21% corporate federal income tax rate.
(j) COVID-19 related expenses include calamity pay and special one-time bonuses to certain associates.
(k) Excludes $13.4 million, $37.4 million and $248.9 million of PPP loans at June 30, 2022, March 31, 2022 and June 30, 2021, respectively.
(l) Excludes $5.6 million of commercial loans held for sale for the period ended June 30, 2022.
       
(m) Pre-tax, pre-provision ("PTPP") net income is calculated as net income, plus income taxes, plus the provision for (recovery of) credit losses, in each case during the applicable period. PTPP net income is a common industry metric utilized in capital analysis and review. PTPP is used to assess the operating performance of Park while excluding the impact of credit losses.
       
RECONCILIATION OF PRE-TAX, PRE-PROVISION NET INCOME  
 THREE MONTHS ENDED SIX MONTHS ENDED
 June 30, 2022March 31, 2022June 30, 2021 June 30, 2022June 30, 2021
Net income$34,324$38,875 $39,132  $73,199 $81,963 
Plus: Income Taxes 7,769 7,699  8,597   15,468  17,579 
Plus: Provision for (recovery of) credit losses 2,991 (4,605) (4,040)  (1,614) (8,895)
Pre-tax, pre-provision net income$45,084$41,969 $43,689  $87,053 $90,647 

Related Links

SHARE

You must be logged in to post a comment.

Recent Publications

You must be logged in to post a comment.

Email newsletter

Receive the latest stock news and signals